What is "trade" vs "retail" price on a new bike?

having previously worked in “the trade” for years I’m fully aware of how much a LBS makes on a product, I really don’t think they make enough.

I now use my lbs for everything I can, I probably could save a bit of money on line but don’t really care. I like the guys in the shop and like the service.

I’m really not bothered how much they make on an item as long as i’m happy with it. They are a business after all.

xeo, FWIW I take my hat off to you. You sound very much like my boss, in it for the right reasons, not afraid to speak his mind a little but still madly passionate about cycling.

Anyway… To all those quoting mad figures on markups etc. for the bike trade (and other trades) you’d do well to just keep quiet! There are MANY knowledgable people on this forum, and some of them work in the trade too, and in positions of authority within certain businesses. I won’t embarrass them by pointing them out here and now, but I know who they are, and they’re the ones who are speaking the most sense on this thread.

Put it this way, even the guys from the importers will agree with you, but often if I want something for my bike, even though I can get it at trade +VAT through work as I work in the industry, I would usually do better to buy it from Rose Bikes, CRC or somewhere else shagging the prices online! Seriously… I want a new set of Conti Rubber Queens for my hardtail right now, the UST versions… They’re £54.99 each at RRP, and I can tell you I can buy them cheaper from Germany than I can from the distributor once I’ve added the VAT!

Whose fault is this? Well it’s not your LBS’s fault. It is not the reputable distributors fault (though there have been some unscrupulous distributors in the past). It is the educated customer wanting expensive parts for pennies (of which I am one too, I’ll hold my hand up and admit it), and the OEM market supplying willingly to the online resellers. But then again, it’s a free market, and everything has to evolve, so you could argue quite rightly that when an LBS goes bust it’s their own fault for not modifying their approach in order to survive. Unscrupulous suppliers have existed, and indeed do still continue to exist sometimes, or there’s the grey route of supply. I had the rep for a certain brand of helmet on the phone yesterday, that is very in demand right now, and he was quoting me the trade prices. So I then asked why on earth can I currently buy them online from a certain price shagger for cheaper than he can sell them to me! Fortunately for him, that’s a hangover problem from the previous supplier, and the online price shagger’s supply has dried up so they have got what they’ve got and won’t be getting any more, but still…

Anyway… Fortunately, whilst for many of us on here cycling is our hobby and we spend a lot of time researching it and finding the best prices, for many people it isn’t quite so all encompassing on their life. These people remember good service, and perceive value differently to some of us wanting to save another £5 off a cassette or chain, and these are the people that keep the LBS in business.

Also… You can’t buy experience! You can’t buy the years of knowledge of MTBing inside my head, and others in my position with even more experience perhaps, or the technical knowhow that goes behind it. My workshop has an open door policy in that if you’re the customer, and you want to learn how to look after your bike better yourself or watch me whilst I work on your bike, as long as you know where the kettle is and you make me a cup of tea, you’re more than welcome! The flipside of this is these customers often end up coming back more anyway as they feel they’ve been welcomed by the shop.

What pains me though is when a customer comes in to buy something, says he can buy it for X on the internet (and I will always try to help someone out here, I will state it might be a bit more expensive from us, but I’ll always quote a price if I can) then I ring the supplier, get a quote from them, and our trade cost + the VAT and carriage is the same as what he can buy it for online! 😕 That hurts cos even though I’m prepared to help out, and be flexible, it’s no successful business model to sell things for less than you buy them for!

Some people seem to confuse mark-up and margin.

Kenny – good to hear you are in a shop. Drop me a line, would be good to catch up.

Unscrupulous suppliers have existed, and indeed do still continue to exist sometimes, or there’s the grey route of supply.

To be fair, its up to the suppliers who they sell to and at what price. If you think a supplier is selling the same product cheaper to other shops then you don’t have to buy from them at all.

I do think its wrong when some LBS (not saying it has happened on here) complain about the customers buying elsewhere. You should be arguing for better prices from your suppliers if they’re screwing you, and advertising the benefits of buying from your shop over online if it’s the overheads that you can’t compete with.

mboy – xeo, FWIW I take my hat off to you. You sound very much like my boss, in it for the right reasons, not afraid to speak his mind a little but still madly passionate about cycling. – Thanks. (what’s FWIW?)

I don’t have any problem at all with people using CRC ect. Its been the roll-call for years in the bike trade. Like I said, I have worked with & met the guys at CRC, & have massive respect for them, & their success.

I have done about 9 Ragley build-ups this year, one example, I sold the frame, did an X-fusion fork, & 10% off some of the bits. He bought the brakes & wheels online, something I didn’t s**t myself about (never have really, its his choice anyway) built the bike & he loves it. Last week, he came in & bought a kids bike. Ill service his bike sometime soon as well.

We don’t really sell much high-end kit to be honest, but because that’s what everybody who is a proper rider uses & buys, its easy to think that’s all there is to bikeshops.

We sell tons of lights £8-£100, helmets £30-£60, mudguards, locks, tyres (do a fair few maxxis, Schwable, Conti for MTB’rs on a friday/sat morning) basic clothing, some Endura, then its bike sales in general (£260-£10000000) for adults, & £115 to £240 for kids. & lastly, & most importantly repairs, which I do myself, fast, well, & efficiently.

Unless you know how to properly setup & maintain a bike, buying a bike online sucks ass though. But that’s just my opinion, something which I normally keep to myself. Please don’t attack me for it ! I understand why people do so 🙂

online price shagger’s

also happen to be a LBS to some people. How should they feel about that?

We’re missing the point of view from two of the big players in this thread; the big manufacturers and the importers/wholesale distributors. Of course, I don’t expect that they worry about what is said about them on internet forums, though. But if so, I’d bet they say something like this:

Big Manufacturer – You have no idea how expensive it is to develop new stuff. We spent XX million (whatever currency) over 3 years developing our new 10 speed drivetrain, then X million to retool the factory to produce it. We have people in our tech department answering email in 19 different languages. Advertising costs X million per year in 50 countries. And you should try to figure out what it will cost to manufacture next year; we have plants in 5 countries and get raw materials from 10 countries. So we have to figure research and development, raw materials, production cost, advertising, shipping, taxes and tariffs, and current and future exchange rates in order to set wholesale and retail prices. And we have to keep our prices in step with our competition, even in countries where they have some sort of advantage due to their production somewhere with a more favorable trade agreement or exchange rate than ours is. Sometimes everything that we sell in a certain market is at a loss because consumers won’t pay a 50% price increase in one year when the exchange rate has changed dramatically. And sometimes we don’t guess right; the Acme shift system lost us X million as it never caught on even though feedback from our testers was overwhelming positive and market research done by an outside firm said that it would be a big seller.

Distributor/Wholesaler – We built a modern warehouse that cost XX million, it will take us 15 years to pay that off. We keep XX million of bikes an parts in stock on a daily basis. We have to order bikes and components by the XX thousand, 90-120 days in advance of delivery. The stuff comes from all over the world, so delivery dates often change without warning. We have to pay the manufacturer 30 days after delivery. And we have no idea what will sell in the end. We got stuck with 50k worth of that Acme shift stuff that we had to sell at a loss. The same with those carbon frames from Brand Q; they had some quality issues with the first batch that were fixed quickly but no one wanted them after that; we had to sell over 1000 frames at a substantial loss. And probably 2/3 of the warranty returns aren’t defective; the parts were either improperly installed or broke well outside of their intended usage. Oh, and if you could tell us what percentage of mountain bikes with 650b wheels we should order for delivery in the spring of 2013, we’d like the answer…

The bottom line is that I don’t think that there is anyone in the bike industry making outrageous profits. If someone does, it will only be for a short while since free market forces will move others in to compete. The big companies probably do make millions in profit, but I’ll bet that most years is a low double digit or even a single digit percentage of their sales. And no doubt some of this profit is invested into R&D to develop new improved products that we’ll want in the future.

The market for bikes, bike parts, and everything else is changing due to the internet. In the short term, there will be anomalies due to exchange rates and such, but in the long term countries will have to bring their trade agreements and tax structures more in line with the rest of the world, or businesses will leave.

And the bike market is so fragmented; there are so many brands of bikes competing with each other that has to make it difficult. Only time will tell whether the market changes to a different distribution model, less brand in competition, or whatever.

And the bike market is so fragmented; there are so many brands of bikes competing with each other that has to make it difficult

I think that is/was the difference between the cycle market and the grey import motorbike market, where there were really only 4 manufacturers that totally dominated the market at the time (the Japanese big 4, the euro manufacturers were insignificant players then). There is more diversity so different suppliers and supply chains can co-exist.

Im to long in the tooth to be ignorant of anyone,

xeo, I never said you were ignorant. You said most peeps who use their local bikeshop, don’t bother with forums, or online shopping and I suggested relying on this ignorance on the part of the customer (to know there is competition) was fragile. The blanket advertising of Wiggle through the TdeF coverage put paid to any lingering ignorance. Possibly at the lower end of the market which you’ve said you serve there is less usage, but people in my local gym who’ve just bought (or rejuvenated) bikes inspired by this summer know about Wiggle and Chain Reaction.

Good to hear your shop is succeeding, I just didn’t think your comment bore scrutiny, or was the foundation for sustained success (as opposed to providing a quality service which is).

OH is a regional manager for car dealers and has worked for several major car manufacturers – it’s a piss poor business model, you’d make more selling the dealership and putting the money in a post office savings account.

As a Volkswagen UK employee, I often wonder why the investors and business owners actually invest in the retail motor trade because as the poster above mentioned, you could sometimes get a better return by putting your money elsewhere.

Volkswagen want and need profitable retailers because if they are not profitable they won’t stay in business and therefore wont be able to sell new cars and that would impact on Volkswagen’s ambition to have a 10% market share in the UK.

Volkswagen expect and want the network to make a 2.5% Return on Sales. Unfortunately the network are only averaging about half of that!

The front end margin on new cars varies but is averages around 10% but this quickly disappears as the market is so competitive and therefore RRP discounting is fairly common. They also over allow on part exchanges (paying more than they are really worth) and in truth most retailers make nothing on new vehicles. However as other posters have mentioned, the retailers can earn back end bonuses for achieving certain sales and satisfaction levels.

The back end bonus that the network can earn is currently 14.5%, although in truth most retailer don’t earn all of this. They would get a certain % for sales satisfaction, another % for service satisfaction, another % for hitting the new car sales target (this will only apply from 2013), another % for renewals customers etc

However in truth nearly all retailer make ZERO from selling new cars and the only reason they probably stay in business is because their used car operations and after sales departments are profitable. However if they didn’t have a new car sales operation the general public would only see them as a “Used Car Dealer”.

With regard to the poster whose neighbour claims they are getting Insignia’s with a 50% margin, I suspect that is complete BS. After all because the market is competitive their dealers would very quickly end up selling the vehicles at a little over cost. That would effect their used car stock values and the overall market value of Insignia’s and very quickly customers would realise that these vehicles deprecate like stones. Why would anybody continue to buy a vehicle that depreciates so quickly? I suspect all the cheap 6 month old Insignia’s are probably ex hire cars, as the hire companies get massive discounts with guaranteed buy back prices. These end up on forecourts at massive discounts over new vehicles.

Finally and FWIW, I can buy new cars directly from Volkswagen at a staff discount. I get these vehicles at the landing cost and this is typically between 20-25% off the RRP.

Aw ! FWIW – for.what.its.worth. ! I’m learning !

Interesting viewpoints going on, for the record, a former business partner of mine is in the Motorbike trade, where margins are around 10%.

As for cars, well, & ill never get my head round why someone would buy a brand new one.

Back to the OP would you please post your annual income and annual out goings so random people can decide if you have too much or too little?
No, I thought not.
There is some sense on this thread, eg xeo and shotsaway, and some absolute BS. 50% margin on a new car!!!! I nearly wet myself laughing at the naivety of some people. My next door neighbour told me he was a spy for MI5 so it must be a fact.

I dont get this defensiveness on the part of some LBS owners. You obviously feel your markups are fair and justifiable, but when asked to justify them, rather than see it as an opportunity to put your case you clam up and say its secret. I generally buy online because I often don’t need the additional benefits the LBS can offer. When I do need those benefits I will happily pay the premium for them.
First bike I bought from my LBS I didn’t ask for a discount, what I asked was that it was fitted with a waterbottle and cage. They said no and that set the tone of our relationship, we are not friends and owe each other no loyalty or favours, I go if I need what they sell.

As this thread has already shown, there is too much misunderstanding about margins and mark-ups. That, in turn, breeds resentment from the less well-informed.

You obviously feel your markups are fair and justifiable, but when asked to justify them, rather than see it as an opportunity to put your case you clam up and say its secret.

I haven’t. I’ve told you several times what they are – well, what the top and bottom ranges are – there’s a lot of variation.

And it’s not up to me to justify my prices, it’s up to you to decide whether you want to spend £x on a bike. Bikes are not a necessity of life*, so what does it matter where every penny of the retail price goes?

*I know – sacrilege 😉

Sorry Ben, looking back that may have come across as a bit snarky. I have no problem with bike shops making a living, but as Druidh says misunderstanding breeds resentment, If retailers are more open about their pricing structure then consumers can decide what suits them best and everyone is happy.
If the problem is the misinformed- inform them

I guess my point is why is a bike shop’s pricing structure any relevance to whether you buy a bike from them?

You decide you want a new bike (or one winks at you slyly from a shop window), you see how much it costs, you check you’ve got enough money, you buy it. At least that’s what I do when I buy stuff…

I get bikes at trade + VAT through a sponsorship deal direct from the distributor and trade is ~ 45% of the RRP.

I’ve been sponsored by a shop (in fishing not cycling but a similar industry in many ways – discount online retailers, local shops struggling etc.) and my deal was “trade” on large items of tackle and “cost” on consumables. What that meant was I paid ticket price less VAT on big things and about 50% of the ticket price on consumables. I would also get 50% off any old stock (discontinued poles or rods).

The lads I knew who ride for shops have roughly the same deal, a new bike would be ticket price less VAT, an inner-tube would be 50% off, last years bikes 50% off.

Personally I just want to make an informed decision for myself on whether the additional service the bike shop provides is worth the price premium to me. You won’t find me coming round your shop complaining about your prices, i’ll make a decision on whether I think its a good deal based on the information I have and go with it. A clearer understanding of why an LBS is more expensive has made me more understanding of their prices, openness fosters understanding.

I get bikes at trade + VAT through a sponsorship deal direct from the distributor and trade is ~ 45% of the RRP.

More well meaning BS?
You don’t state the brand so at least you’re not biting the hand that feeds you. Different brands have different pricing structures. Different retailers get different prices.
Imagine this: “Hello is this the bike distributor? Harry’s Bikes here.
I’d like to buy one unit of your best selling model in the most popular size and then pay you for it in 30 days. How big is my discount?”
Or “Hello Bloggs Bikes here. I’d like to become a stockist of your brand and carry all the sizes in all the models and pay you cash on collection. How big is my discount?”
Answer a lot bigger than Harry’s.
At the end of the day it makes no difference to the retail customer what the LBS gets in terms of a discount. You just do your research on prices and then decide if you want to pay a premium for a face to face service.

Personally I just want to make an informed decision for myself on whether the additional service the bike shop provides is worth the price premium to me.

Ah, you see, that’s a different thing entirely 😉

The additional services a shop provides should be reasonably obvious – you get to see and try the bike first, you get it properly and professionally assembled, you get free services afterwards, and you always have a local point-of-contact if and when there is any servicing or warranty problems.

Whether that’s worth the extra cost is entirely up to you.

(Of course I’m speaking for other shops here mostly – most of what I do isn’t available from other shops, and I do a lot of mail order)

If any of you came into my little bikeshop, I would have a rack of bikes, all on display at RRP. (if it wasn’t for that we would all be zombies trying to outdo each other and making a skinned living for it)

I would be relaxed, friendly, ask a ton of questions, look yer up&down, get a bike out, set it up, & let you test ride it outside. We do a little deal on P&A, and two free services. Works pretty well for us.

Some peeps like to look at pics on a computer, and get a box of stuff in the post, some like to walk into shops and chat 🙂

Either way, I have customers that do both. Hell, one of my regs. wanted to build himself some wheels (I already did a set for him last year) so I helped him decide on rims, which he bought from us, he asked about hubs, i chatted about that for about 20mins with him. Two days later I called to tell him his rims were in, turns out he bought XT hubs online (I didn’t blink an eyelid) then I sold him the exact spokes, gave him some advice on building them, (whilst I was fixing a bike) wished him luck & off he went.

Sometimes it happens both ways 🙂 as a shop, in brick and mortar, we (hopefully!) will always be here. Doing it for the love, not so much for the fast buck!

I ordered a rear shock from my one of my LBS, they left the receipt in the box…cost them £240, they passed it on to me for £380… Not bad profit for one phone call!!

You decide you want a new bike (or one winks at you slyly from a shop window), you see how much it costs, you check you’ve got enough money, you buy it. At least that’s what I do when I buy stuff…

So you dont shop around and see if you can find that exact same thing at a lower price? Must be nice to be in that position. That to me is the “see how much it costs” bit that is the substance of this thread. Do you buy the Easton Haven stem winking at you from your LBS for £70 or do you spend 30 seconds on your smart phone to discover Merlin are doing em for £37?…..I wouldnt want to be in Xeo etcs position in this sort of market, and I think we’ve concluded shops survive on custom and loyalty through quality of service.

I think you misunderstood my point – sure, sometimes looking around for the best price makes sense and that’s completely normal – but you don’t need to know the exact way the price is worked out by your LBS, do you?

How does knowing the trade price of something help you?

Thank you crashtestmonkey, I have just purchased an Easton EA70 Monkeybar and was looking to buy a stem. That is not a bad price!

One of the mechanics at my local Evans was telling me about the Trek Remedy he purchased recently using his employee discount and a Ride2Work voucher. It was a third of RRP.

I still weep gently into my pillow thinking about it.

From a bike shop worker perspective i think Xeo hit it on the head with his post up there ^ , sure there are folk who are comfortable enough with their mechanical knowledge to shop online and fit the component themselves – that’s great – go ahead and do that but if Xeo’s customers are anything like our loyal customers they are a different breed entirely, we don’t sell anything under the £400 or so price mark as the amount of time it takes to correctly set-up a cheap bike is not worth it and we know it’s going to wear out too quickly and go out of tune/be heavy and cause dissatisfaction with the purchase’e so we spend time advising them and finding out exactly what they need in a bike, sometimes we advise against the all-singing-all dancing superbike and show them a lesser model which would be better for their needs.

Other customers come in and we’ll spend time giving them advice on components/bikes/clothing etc…etc and then find out they bought them online for a bit cheaper than we can do, while that can be a bit annoying, in the grand scheme of things it doesn’t matter as we gave them the advice to begin with and they may tell their friends of the good service and advice we gave them or they may (and do) bring their bought online bikes in for servicing or to fit their bought online parts – we don’t turn anyone away as we cannot afford to, unless they bring in a cheap bike that is seriously not worth spending workshop time on to repair then we’ll be honest and to the point rather than waste our time and their time and money.

Most of our customers (as we’re in a small rural town) pop in on a daily/weekly basis just for a chat, bring us coffee, occasional beer if they pass the shop and see us working late at night or sometimes if we are on our own (there’s only two of us) they’ll pop down the town and buy us lunch etc.

Juast as Xeo says i do it for the love of working on bikes and i get a kick out of repairing someones bike to a standard that i’d be happy to ride, for 20odd years i’ve done jobs that i’ve hated, that sunday night feeling of dread as i realised i had another 5 days of drudgery doing a job just so i could pay bills that i ran up to help me forget i had a shit job in the first place finally came to a head 7weeks ago, i quit a very stable job that i had grown to detest and went to work for a mate who started up his own bike shop two years previously, i earn a pittance for someone of my age, i have to be very careful with what wage i do earn, very careful how much i use my car etc as petrol is so **** expensive, very careful how much i spend on shopping etc, as for holidays?….ha ha!….not had one of those for 7 years and can’t see myself having one for another 7 years but i don’t care as for once in my life i look forward to going to work, i look forward to the challenge of whatever comes through the door, i look forward to talking bout bikes n’ stuff wi customers everyday. I hope we can make a real go of the business, i know i’m willing to put the effort and time into it and i don’t want to earn a shedload of cash out it either, as long as i can pay the bills and go home satisfied at the end of the day knowing i’ve made a difference that’ll do it for me.

Perhaps some of the larger bike chains are making shedloads of cash but every small bike shop owner i know (and i know a fair few) are just making a living out of it and no more.

This is true.

The other point I’ll make before bed is this: quite a few people aren’t price-conscious. For them, the effort required to chase about and find the lowest price isn’t worth the saving. Fr example if you’re paid £30/hr and you spend an hour to save £10, you’ve just lost £20. Others know that bikes are pretty cheap (even expensive ones) compared to cars, houses or yachts, so can’t be bothered worrying about price. And others know that good kit, knowledge and skills cost money, and don’t mind paying for them. My parents just spent £2500 on a new chair for reading books in, for example, and waited 3 months for delivery. And I got the cast-off for the shop 😉

So, odd as it might sound, for lots of people the price isn’t the most important feature of a bike.

Me i bought a 500 quid giant talon
Whether it cost 300 I doent care
I liked the man that sold it to me deal done
What’s it worth ? Who cares it makes me feel like a kid when I’m out on it .the cost priceless

stuarty – Member

Me i bought a 500 quid giant talon
Whether it cost 300 I doent care
I liked the man that sold it to me deal done
What’s it worth ? Who cares it makes me feel like a kid when I’m out on it .the cost priceless

Good point. The truth is (depending on the level that the shop is on with Giant) the bike would of cost him say between 290 and 325. So let’s say for arguments sake it was 300. He has to give the tax man 83 of that. So the profit is down to 117. He has to pay someone to build it up, say 5? if he/she is quick. He might of had to pay shipping, if he bought in less than freight free, 10ish? He has to pay to dispose of the box, plastic etc. The list go’s on. He might make 90 pounds? That’s before he’s paid the rent, electric, business rates – then given the tax man another wedge of corporation tax. If he give you 10% discount you are down to peanuts.

The long and short of it is that there is not a great amount to be made. If you are a small LBS with limited buying power and discount a high end brand by 15% off RRP you will not make a very much at all, that’s how tight the margins are.

You pay your money and you make your choice, if there is a specific value proposition in purchasing from a LBS at a price that suits both you and the shop (that’s the market) then do it, if not shop else where, but whining and moaning about LBS’s ripping you off is not very likely to be true, how much do you spend on food every year? How much could you buy it for if you shopped around, yet are you on consumer forums demanding to know how much Tesco’s pay for a loaf of bread?

I know that no one likes to pay more than they have to for anything, but as has been said previously, it’s nor just about what you are walking out the shop with, it’s about the service, the advice and the after sales care. If you don’t give a hoot about that then shop online, but there really is no conspiracy.

I ordered a rear shock from my one of my LBS, they left the receipt in the box…cost them £240, they passed it on to me for £380… Not bad profit for one phone call!!

Then they pay the vat man £75. Assuming it was a special order they will also have paid postage. Then rent, rates and wages. Suddenly the net profit on your purchase becomes less impressive.

Corporation tax? What ? You mean as a buisness you have to actually pay this, sounds pretty proposterous in this day and age.

How does knowing the trade price of something help you?

in which case I did miss your point, I dont think trade price is relevant, esp when the big mail orders are paying and selling for less than trade prices by grey importing.

curiousyellow, theyre £66 now @ merlin but earlier this year they were doing bars and stems at close to half price.

The other point I’ll make before bed is this: quite a few people aren’t price-conscious.

thats the point I thought you were making first time around 😀

I ordered a rear shock from my one of my LBS, they left the receipt in the box…cost them £240, they passed it on to me for £380… Not bad profit for one phone call!!
Then they pay the vat man £75. Assuming it was a special order they will also have paid postage. Then rent, rates and wages. Suddenly the net profit on your purchase becomes less impressive.

Do they?

They paid 240 plus VAT so incurred an ITC (input tax credit) of 48 quid.
They sell for 380 incl vat so collect vat of 63 quid.
Ultimately on this particular transaction they owe the tax man 15 quid. right?

From that 15 quid they owe the tax man, there may have been vat on the shipping. They may have vat they can write off against other expenses

Corporaton tax?.. aren’t we all lead to believe there no money to be made in running a bike shop.. in which case the corporation tax liability is zero.

if theres no money to be had running a high street coffee chain or even a mobile telecomunications supplier ,theres definitely no money to be had in running a bike shop…

They paid 240 plus VAT so incurred an ITC (input tax credit) of 48 quid.
They sell for 380 incl vat so collect vat of 63 quid.
Ultimately on this particular transaction they owe the tax man 15 quid. right?

Sale price is £380. Of that, £63 goes to the VAT man, £10 goes on shipping (approx, for a one-off order), leaving a profit of £67.

And that’s exactly the sort of misunderstanding that occurs when folk find out what the Trade Price is!

And that’s a profit margin of 17%. Doesn’t sound all that impressive any more, does it?

Corporaton tax?.. aren’t we all lead to believe there no money to be made in running a bike shop.. in which case the corporation tax liability is zero.

Well i’m not sure if the UK tax laws have changed, but when i had a bike shop we paid ours. If you are not a Ltd Company thou you wouldn’t have this. If you are not paying this tax then you are not going to be able to live much of a life on your pay alone, income is derived from dividend payouts. They might of closed that loophole thou?

A shop will be doing well to make between 25% net on all sales repair and service over the year. So say a shop takes 200k a year (prob about average for a small well positioned shop). It has 50k to split between all the staff and other costs. No there is not much money in the bike trade.

Jewelery and high end watches, now that’s a different fish of kettles.

I think there are a lot of other industries making more out of their customers than the bike industry.

To produce bumpers for a car it costs around £7 – front and rear and that’s painted. How much does the dealer charge?………….

An engine is around the £50 mark.